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Also Noted: IneoQuest
Spotlight On... Keeping up with industry changes at NCTA's annual show
Dish won't air WWE Extreme Rules; Digisoft, Discover Digital join on OTT for rural South Africa and much more...
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News From the Fierce Network:
1. Hulu cracks down on VPN masking to block access by non-U.S. viewers
2. Google reportedly preparing voice command upgrade to Android; Angry Birds maker profit tumbles
3. NextiraOne takes on the Dimension Data brand
| This week's sponsor is Vubiquity. | | 
| | Vubiquity Booth Number 909 | NCTA CABLE SHOW |
Today's Top News 1. It's official: Comcast, Charter to swap subs, spin off a new business
Comcast (NASDAQ: CMCSA) and Charter Communications (NASDAQ: CHTR) have made official what's been reported for weeks. As part of Comcast's attempt to acquire Time Warner Cable (NYSE: TWC) for $45.2 billion, it's divesting subscribers, consolidating regional operating areas and creating a new publicly traded company, SpinCo, in cooperation with Charter. Among other things, the move will make Charter the nation's second largest cable operator, with 5.7 million video customers of its own and 8.2 million customers when SpinCo is added in. The deal, which both parties continue to describe as "tax-efficient," will leave Comcast below the threshold of 30 percent of national MVPD subscribers even as it acquires Time Warner Cable's nationwide operations. A presentation on Charter's investor page extensively details the tax implications of the transaction. "The realignment of key cable markets achieved in these transactions will enable Comcast to fill in our footprint and deliver operational efficiencies and technology improvements," Comcast Chairman-CEO Brian Roberts said in a press release and later reiterated during a webcast with analysts and interested parties. The press release explained the deal's three key parts: - Comcast will divest TWC systems, serving about 1.4 million customers, directly to Charter for cash.
- Comcast and Charter will transfer another 1.6 million existing TWC customers and 1.6 million Charter customers in a "tax-efficient like kind exchange" to improve geographic operational efficiencies.
- Comcast will form and spin off to its shareholders an independent, publicly traded company called SpinCo to operate systems serving about 2.15 million existing customers. Comcast and former TWC shareholders will own about 67 percent of SpinCo and Charter will get the other 33 percent. The nine-member board of directors will include six independent directors and three designated by Charter. Comcast will have no role in managing SpinCo.
In all, Charter will grow from the deal with a new footprint that is "easier to operate and allow us to provide better high quality services at the local level," Charter President-CEO Tom Rutledge said in the webcast. This, he said, should translate "to better customer satisfaction and faster growth." Growth is a key reason for consolidating the systems, Rutledge added, noting that some of the markets are "significantly under-penetrated … so I think we have a big runway in front of us." An interesting part of the swap will be what happens to customers on Comcast's X1 platform and whether Charter will adopt that advanced platform as well. "We have had preliminary discussions with Comcast about that and have a similar view with regard to cloud-based user interfaces," said Rutledge. Charter now partners with TiVo on much of its cloud-based set-top box technology. "If we can find a way to efficiently work together on that we'd be interested in doing so." Comcast Cable President Neil Smit noted that Comcast would provide management services and a service agreement for the customers that are currently on X1 in those markets. The deal did not include any swaps between Comcast and Charter, directly. "Comcast felt … that it was more appropriate to utilize the spin structure for systems that would ultimately be divested. With regards to the swap, it was more efficient to utilize Time Warner Cable systems with regards to the transfer," Comcast CFO Michael Angelakis explained. The whole deal could become moot if federal regulators put the kibosh on the TWC acquisition. Part of the reasoning behind the move was to illustrate to those regulators that the newly merged Comcast would not manage more than 30 percent of total U.S. MVPD subscribers. This, Roberts said, is about the same market share Comcast had in 2002 after it acquired AT&T Broadband and in 2006 when it acquired Adelphia. The big winner is Charter, with a subscriber base expansion of 1.4 million net customers. MoffettNathanson analyst Craig Moffett pointed to the ever-shifting pieces of the acquisition, noting: "A Shakespearean comedy could be written of the Comcast-Charter-Time Warner Cable love triangle. Charter, the would-be bride, is jilted as her paramour, the sloppy but lovable TWC, is snatched away by her erstwhile friend, the domineering alpha-girl Comcast. But wait! Satisfied with her show of dominance, Comcast deigns to invite Charter to the bachelorette party… and that's where things get weird. It is now official that Charter will leave her TWC courtship with a sizable consolation prize. Sure, it's a slightly sordid story, but… well, all's well that ends well. After all, Charter is a story stock, and M&A is the most important chapter. For more:
- see this press release
- and Charter's investor presentation Related articles:
Time Warner Cable plows ahead with 'priorities,' loses 34K video subs
Rumor mill: Charter 'near deal' to get 1.5M subs from Comcast
Netflix opposes Comcast-TWC merger, raises subscription by up to $2 in some markets
Comcast, Time Warner Cable reportedly discuss selling subscribers to Charter Read more about: acquisition, SpinCo
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| This week's sponsor is Ooyala. | 
| Webinar: Making Money From OTT
Thursday, May 8th, 11am CET/ 10am UTC
With rising programming costs, pay-TV providers are looking at ways they can benefit from OTT entertainment. This webinar will look at how Pay-TV providers can embrace OTT and not erode their core subscription TV services. Register Today! |
2. Charter loses video subscribers, sees Internet gains
Charter Communications (NASDAQ: CHTR) lost about 66,000 video subscribers year-over-year in the first quarter and gained about 353,000 broadband subscribers during the same time period, according to a company earnings report. During the time period in question, Charter completed its acquisition of Cablevision's (NYSE: CVC) Bresnan Broadband Holdings and subsidiaries, thus adding cable systems that serve about 375,000 residential and business customers. First quarter revenues were up 7.5 percent year-over-year to $2.2 billion, led by "growth in Internet, video and commercial revenues," the company said in an earnings release. Video revenue was up 6.3 percent, from $1.025 billion to $1.090 billion. Internet revenue was up 15.4 percent from $534 million to $616 million, and commercial revenues were up 20 percent from $195 million to $234 million year-over-year. Voice revenues, however, dipped 18.5 percent from $184 million to $150 million. Charter said it now has 4 percent more "residential customer relationships" (5.67 million versus 5.45 million) and 24 percent more residential non-video customers (1.478 million versus 1.189 million). For the quarter, the carrier said it lost 5,000 video subscribers--compared to a loss of 10,000 a year ago--and gained 12,000 Internet subs, versus 10,000 gained a year ago. "In the past two years we have repositioned Charter to provide a superior set of products and services to our customers. And we are beginning to see the results in our operating metrics, customer satisfaction and financial performance," Charter President-CEO Tom Rutledge said in the release. "As we move to an all-digital platform over the course of this year, we are unleashing the inherent superiority of our high capacity two-way interactive network." The company is especially emphasizing its new product suite, Charter Spectrum, which Rutledge said "will deliver the most HD channels, video-on-demand and the fastest Internet service across the vast majority of our markets, all packaged with high quality service at a competitive price point." Charter began introducing Charter Spectrum in all-digital markets in Dallas-Fort Worth and Greenville, S.C. The Bresnan acquisition was evident in the fact that residential primary service units (PSUs) grew by 206,000 in the quarter versus 140,000 a year ago. In the first quarter, Charter said, it added 18,000 PSUs even as video and Internet passings remained flat and penetration across all business phases was basically unchanged. "Residential customer relationships grew by 112,000 from 61,000 in the first quarter of 2013 with triple play sell-in improving year-over-year to over 50 percent of total residential video sales," the company release said, noting that by the end of the quarter Charter had completed 30 percent of an all-digital initiative that allows the company to "offer more advanced products and services and provides residential customers with two-way digital set-top." For more:
- Charter has this earnings release Related articles:
Charter sets 802.11ac Wi-Fi router rollout; Comcast scammers face payback, jail time
Charter leases more floor space in Stamford; Time Warner Cable sues IBEW union
Charter seeks voter help to battle Montana tax increase Read more about: Cablevision, Charter
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3. Rabbit TV jumps into live streaming, while Aereo's Diller 'confident' after Supreme Court hearing
Even as Aereo fights for its life before the U.S. Supreme Court, another TV interloper has appeared on the scene. FreeCast's Rabbit TV has added a streaming device to its eMedia guide so its 3 million users can access U.S. TV stations over the Web. According to a story in Advanced Television, Rabbit TV maintains that the TV channels are already accessible via the Web and it is just aggregating them into a package for its subscribers.  | | Rabbit TV's home page claims that subscribers can watch major broadcast networks as well as several cable channels including A&E, Discovery, Spike TV. (Screenshot: rabbittv.com) | "When people talk about live TV, aside from sporting events and award shows, what they're really talking about is scheduled programming--much like a playlist on the Web," FreeCast CEO William Mobley said in the story. "Now we're looking at scheduled programming as boundless and limitless because it can be watched via the Web all over the world." Mobley's contention is that Aereo is actually forcing networks to take their fare online "which will in turn drive cable companies to become primarily bandwidth providers and the economics will shift in that direction." In the meantime, as that shift is happening, Rabbit TV expects live TV stations to work "hand-in-hand" with its newly launched original content network to create hundreds of scheduled programming channels available through Rabbit TV's Web-based guide. On the Aereo front, IAC Chairman Barry Diller, a major investor in the company, told CNN's "Reliable Sources" that he left the Supreme Court hearing feeling good about Aereo's chances to beat back broadcasters and stay alive. He did add, however, that this confidence "means nothing" in the overall scheme of things. "Aereo is, essentially, simply an antenna device that replaces technologically what you used to have to do--go up to your rooftop and erect and antenna," Diller said on the program. Aereo Founder-CEO Chet Kanojia, meanwhile, took his position to the Associated Press where he suggested that Aereo is nothing more than the next transition being brought by the growth of the internet. "It happened to books, news people, it happened to music people, it happened to Blockbuster," he said of the Internet's disruptive impact on old media. "There is nothing in our Constitution that says there is a sacred set of companies that will never be affected by new technology." That, however, is up to the Supreme Court to decide, and if it decides in favor of Aereo nothing will happen overnight, he added. "Change is a long process. Aereo is simply providing a piece of the puzzle. After we win, it's not that a sea change is going to happen overnight. It is just going to be that we will be allowed to continue to fit that missing piece in a consumer's life as they're evolving," he said. For more:
- Advanced Television has this story
- CNN has this story
- AP (via The Columbus Dispatch) has this story Related articles:
Kanojia: Aereo lets consumers 'think outside the cable bundle'
Aereo will have tough time proving its case, legal experts say
Aereo CEO wants to sell cable operators a cloud-based DVR for $10 per sub Read more about: Aereo
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4. New Jersey regulators: Verizon can use DSL, wireless to deliver broadband to rural areas
The New Jersey Board of Public Utilities (BPU) in a unanimous vote said it is okay for Verizon (NYSE: VZ) to serve non-fibered areas of the state with DSL or mobile wireless. The deal clarifies Verizon's obligations under a 20-year-old pledge to provide broadband service throughout New Jersey and leaves some rural communities on the wrong side of the digital divide. In rural Southern New Jersey, in particular, landline telephone is already an issue: broadband is, for many, out of the question. Hopewell Township Committeeman Greg Facemeyer, in a South Jersey Times story, said Verizon was leaving his community and others in surrounding areas of Cumberland County in the lurch. The article cited several county officials who said more than 7 percent of Cumberland County households still lack access to sufficient broadband Internet--more than 10 times the state average. "Why should we get left behind?" Facemeyer asked, noting that he believed the BPU acted without input from his community. His position was backed by state Sen. Jeff Van Drew, who said he will continue his efforts to make sure that Hopewell gets better service. In unanimously (4-0) clearing the way for Verizon, the BPU agreed with the telco that fiber was never part of an original commitment made in 1993 and that the service provider is only obligated to to deliver broadband speeds as fast as DSL, either by wired or wireless means. BPU commissioner Jeanne Fox, in a NJ Spotlight story, called the substitution of wireless for wireline broadband in some areas a "decent stipulation." But even she wasn't delighted. "I'm not thrilled with wireless service. I don't think it's as reliable but it may be the future," she said. It's not enough, said New Jersey Division of Rate Counsel Director Stefanie Brand. "We have heard from a number of people, mostly customers in rural areas, that they do not have access to broadband," Brand told the Asbury Park Press. "In this day and age, Internet is no longer a luxury, it is a necessity of life." The BPU, to an extent, agreed with that and stipulated as part of the settlement that Verizon would make high-speed service available by copper, fiber or wireless to a minimum of 35 single line business or residential customers who ask for it and are located in a census tract that has no access to high-speed services from cable companies or 4G wireless. Those customers must agree to a one-year contract and pay a $100 deposit, according to the Asbury Park Press story. For more:
- NJ.com has this story
- NJ Spotlight has this story
- Asbury Park Press has this story Related articles:
Verizon adds 57,000 FiOS video, 98,000 Internet subs in first quarter
Rural South Jersey communities: Verizon reneging on FiOS promise
Buffalo officials, residents want Verizon to change its FiOS course Read more about: Broadband, Hopewell
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5. Basic cable subs show hankering for movie fare
In perhaps a hidden statement about the quality of programming in television's new golden age, movie consumption on basic cable hit a three-year high in 2013, according to statistics compiled by IHS Technology. Even more telling, there were fewer unique movies being broadcast during the year, so subscribers were watching more movie reruns than ever. "Cable networks are seeing the benefit of airing movies that get better non-prime time rating that some TV shows during the same time slots," Erick Brannon, senior analyst for television media at IHS said in a press release. "Drawing in viewers during non-primetime hours is proving valuable, especially during the summer months when more people are at home during the day." Reading into the statistics even a little further, the nation's psyche might also have been involved in the selection of the movies. Comedy, the researchers said, led the way in both 2012 and 2013 while dramas were at the top of the list in 2011. Oddly, at least for some, the most played movie in 2013 was "Mrs. Doubtfire," a 1993 Fox release which was played 66 times across five networks. This helped Fox lead the way with 89,623 hours of movie content shown on U.S. basic cable--1,800 hours more than the 88,443 shown in 2011. Fox movies accounted for nearly 6.5 percent of all movie airtime in 2013, followed by Warner. Among basic cable stations, AMC (which not coincidentally started its life as American Movie Classics) was a top outlet, despite a growing list of quality original programming like "Mad Men" and "The Walking Dead." "AMC sees significant value in relying on movie content to make up the majority of its non-primetime TV schedule," Brannon concluded. For more:
- IHS has this press release Related articles:
Despite multiple screen options, TV remains preferred streaming device
Netflix added to TiVo set-tops at Atlantic Broadband, Grande, RCN
Amazon video streams triple while sales climb 23 percent, but profits remain thin Read more about: video consumption, Basic Cable
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Also Noted | This week's sponsor is IneoQuest. |  | Webinar: Video Analytics Strategies for Monetizing the Video Experience
Thursday, May 15th, 11am ET / 8am PT As consumers have more ways to watch video than ever before, video providers are looking at new business strategies for monetizing their video services, to reduce churn, increase subscriber base, reduce capital and operational expenditure and optimize investments. This webinar will provide an overview of how providers can monetize their video services through video analytics strategies. Register Today! |
SPOTLIGHT ON... Keeping up with industry changes at NCTA's annual show Los Angeles will host The Cable Show 2014, the National Cable & Telecommunications Association's annual trade show, at the Los Angeles Convention Center from April 29-May 1. FierceCable will be on hand covering the events, keynotes and panels as they happen. Check our NCTA Live page regularly for updates from Fierce Editor-in-Chief Sue Marek and correspondent Craig Kuhl. More cable news from around the Web: > Dish Network will not air the WWE Extreme Rules pay-per-view event, protesting, along with fellow satellite service provider DirecTV, the WWE's new Net TV venture which includes its PPV events as part of a $9.99 a month subscription. Story > Dutch telecom KPN gained 27,000 net new TV subscribers in the first quarter buoyed by the additions of 62,000 who joined the IPTV platform while 35,000 abandoned the company's DTT platform and other services. Story > The Rocky Mountain Chapter of the Women in Cable Telecommunications (WICT) will honor nine industry leaders at its annual Walk of Fame event May 22. Press release > Steve Oetegenn has been named president of network security provider Verimatrix. Press release > Digisoft.tv and Discover Digital are joining forces to create OTT video platforms to deliver educational and entertainment content in remote and poorly connected areas of South Africa. Story Telecom News > tw telecom and DuPont Fabros Technology have established a pact that will give DFT business customers a direct access to Amazon Web Services cloud services suite. Full article Wireless News > T-Mobile US is notifying customers of its MetroPCS prepaid brand in New England and Las Vegas that they will need to upgrade their devices as T-Mobile prepares to shut off MetroPCS' legacy CDMA network in those areas and move customers to its GSM-based network. Full article And finally … Belgium's Telenet added 17,700 net digital TV subscribers in the first quarter and now serves 1.509 million digital TV customers. Story > Self-optimizing networks deliver the new customer experience - Wednesday, May 7, 9:30 am ET/ 6:30 am PT In this presentation, the speakers will discuss the strategic move towards automation, the impact of current and future self-optimizing network (SON) use cases on the customer experience, and identify key differentiators among the leading SON providers. Register Today! > Making Money From OTT - Thursday, May 8, 2014, 10am GMT / 5am ET With rising programming costs, pay-TV providers are looking at ways they can benefit from OTT entertainment. This webinar will look at how Pay-TV providers can embrace OTT and not erode their core subscription TV services. Register Today! > Video Analytics Strategies for Monetizing the Video Experience - Thursday, May 15, 2014 11am ET / 8am PT As consumers have more ways to watch video than ever before, video providers are looking at new business strategies for monetizing their video services, to reduce churn, increase subscriber base, reduce capital and operational expenditure and optimize investments. This webinar will provide an overview of how providers can monetize their video services through video analytics strategies. Register Today!
| > Register: The Premier Connected Home Conference - May 13-15, 2014 - San Francisco, CA CONNECTIONS™: The Premier Connected Home Conference, hosted by Parks Associates, focuses on consumer trends, emerging technologies, value-added services & business strategies for the entertainment and smart home industries. Keynotes: AT&T, ARRIS, Cisco, iControl Networks, Lowe's. www.connectionsus.com
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